Saturday, February 03, 2007

The Oil Drum has posted a recent Bloomberg interview clip with Matthew Simmons to their site. In it, Simmons (chairman of Simmons & Co. International and a prominent spokesman on the issue of "peak oil") warns that the world faces a shortage of oil supply and action must be taken immediately to mitigate the situation. As Simmons sees it, we may have reached peak production of oil supply and we need to start dealing with the question of how to cope with shrinking production numbers. In other words, how do we respond to a world in which crude oil supplies are dropping (from say, 85 million barrels down to 70 million barrels) at a time when most people are expecting supplies to increase?

There was a bit of confusion when, during the interview, Simmons made the point that some global consumers are already paying an effective price of $300 barrel oil in finished products. The interviewer seemed to interpret this as a directional call for $300 barrel oil. While I'm sure that Simmons would not back away from a longer term forecast of triple digit crude oil prices, I don't know that he meant to give the impression he was making a price forecast. See comments in The Oil Drum's thread topic for more on this.